The legal and corporate sectors are abuzz with news that Singapore may introduce deferred prosecution agreements (DPA) in its legal system.

Law Minister K. Shanmugam has announced in Parliament that DPAs may be adopted for offences committed by companies. This comes in the wake of such an agreement between the United States Department of Justice (DOJ) and Singapore's Keppel Offshore & Marine (Keppel O&M), following bribe payments by Keppel O&M to Brazilian officials.

Recent discussions have surfaced concerns that DPAs represent a form of amnesty to corporate criminals, are essentially non-prosecution agreements and would enable large financial penalties to be imposed on errant companies beyond that prescribed by law for specific offences.

These views may not quite reflect the true nature of DPAs, especially those now in existence in the US and the United Kingdom, which Singapore is looking at for its own proposed regime.

DPAs were first introduced in the US in 1972, following a settlement between Salomon Brothers, an investment bank, and the DOJ under which the bank paid US$290 million for misconduct in Treasury auctions and government securities trading.

A DPA enables the prosecutor, after a charge has been preferred against the defendant, to defer the prosecution for a certain period upon certain requirements being satisfied by the defendant, including the payment of a financial penalty.

In the case of Keppel O&M, the company entered into a DPA with the DOJ following the filing of criminal information on Dec 22 last year in the Eastern District of New York charging Keppel O&M with conspiracy to violate the anti-bribery provisions of the US Foreign Corrupt Practices Act.

Under its agreement with the department to defer the continuation of the prosecution for a period of three years, Keppel O&M made a commitment to implement "rigorous internal controls and to cooperate fully with the department's ongoing investigation" and to pay a criminal penalty of exactly US$422,216,980 (S$552 million).

The specific figure indicates that there was a particular formula adopted in its calculation. The penalty is in accordance with US Federal Sentencing Guidelines for such offences. According to the DOJ, the final sum imposed reflects a 25 per cent discount for cooperation with the DOJ's investigation, extensive remedial measures taken by Keppel O&M, which included disciplining 17 employees involved in the bribery, and implementing a system of compliance measures.

At the end of three years, the deferred charge against Keppel O&M will be withdrawn. However, if Keppel O&M breaches the agreement or commits any serious offence, it risks facing a trial in the US, unless the DOJ grants an extension of the agreement.

DPAs offer obvious advantages to both parties to the agreement. Corporate crimes in most cases are complex and their investigation and prosecution are costly to the state, which must establish guilt beyond reasonable doubt in a criminal trial.

A DPA brings a speedy resolution to criminal proceedings with minimal costs to the state and to the company.

It also avoids reputational and economic losses to a company following a prosecution, which may result in shareholders, suppliers and employers being unduly punished.

A DPA also encourages self-reporting by companies and consequent remedial measures being taken. This has encouraged France in 2016 to adopt DPAs, which are also now under consideration in Canada and Australia.

There are, however, some concerns about DPAs that we must be conscious of in drafting and implementing them. It is feared that frequent use of DPAs may dilute the principle of deterrence of corporate crime. It may also "encourage lax and dubious behaviour on the part of prosecutors" to settle with offenders rather than make the effort to prosecute them, as US judge Jed Rakoff warned in 2013.

It has, therefore, been suggested in the UK that DPAs should only be used where there is a strong public interest to do so and where there has been full cooperation and suitable remedial action taken by corporate offenders.

The moot question is whether, in Singapore, we should have judicial supervision in our proposed DPA regime as in the UK, or opt for the US system, with minimal court intervention. Judicial supervision will delay the implementation of DPAs and prove more costly. Perhaps in recognition of the judicial resources needed for taking the UK route, Australia is proposing having a retired judge to consider whether a DPA is in the public interest and whether its terms are "fair, reasonable and proportionate", as its consultation paper puts it.

In Singapore, Mr Shanmugam indicated that if a DPA is implemented, terms have to be approved by the High Court.

"The High Court will have to look at what's fair and what's reasonable and what's proportionate… and agreements must be published once approved," he said.

In fact, my own view is that judicial supervision may not be necessary.

Those who decry a system with no judicial supervision may wish to remember that the Public Prosecutor in Singapore has an almost unfettered discretion in deciding whether or not to prosecute and on what charges to prosecute if he chooses to do so. The Court of Appeal has held that the courts should presume that the Public Prosecutor acts in the public interest in discharging his prosecutorial decisions.

Finally, DPAs are not completely alien to our corporate world. For almost 20 years, the Monetary Authority of Singapore (MAS) has entered into agreements with both corporate and individual defendants for the imposition of a civil penalty in lieu of a prosecution in court. The civil penalty regime complements criminal sanctions and provides "a nuanced approach to combat market misconduct", such as insider trading and market rigging, according to the MAS website.

Although not required by law, MAS publishes on its website the names of those on whom a civil penalty has been imposed, together with the amount of the penalty imposed. By all accounts, the civil penalty regime has worked efficiently and fairly for close to two decades.

Transparency in its operation, with its compelling public accountability, is then perhaps the most appropriate guarantee of ensuring that the proposed DPA functions fairly and efficiently.

• The writer is a law professor at the Singapore Management University.